US Stocks – Resilient, so far!
The US Stock market has trended downward the past 2 weeks, however in the face of Tariff issues, inverted yield curves, slowing global economic data, lower US job growth, Oil attacks, Brexit and NOW the democratic party is going to attempt to impeach the president, the Markets are up in the US over 19% based on our Standard and Poors 500 Stock Index.
The question is why?
Corporate Earnings is my answer up until this point. Low unemployment has contributed to the consumer feeling very confident and continuing to spend money on discretionary items.
It’s certainly no secret that earnings growth has slowed remarkably in 2019, however earnings have shown significant resiliency despite the impact of tariffs. The tariffs not only influence a corporation’s bottom line, they also are now influencing what happens to corporate profits. Companies are free to decide what to do with profits; either increase shareholder dividends, use for expansion or buy back their own stock. Buying back their stock has been the recent choice as expected. Would you look to expand until you had more clarity on trade and tariffs? Of course you would wait! What will happen going forward?
As always, time will tell!!
Growth versus Value Investing
It’s no secret that since January 1, 2018, Growth stocks have significantly outperformed Value stocks. Let’s face it, just look around at the changes in technology that have added value to your life and you can see why. So far in September, the tide appears to have changed and many investors are now debating whether they should be in growth or value. As of last Friday, Large, Mid and Small Growth companies are flat for the month, whereas Large, Mid and Small value companies are all up over 3%. Should you be rotating your investments from Growth to Value?
If you’re a client of our firm you know that we do not over or underweight either side of the fence. We take an approach to have client equities divided fairly evenly between the two. It is so hard to time when the climate will change and most investors get it wrong. It’s possible the value will become the leader for a while, however if we do ever get a trade deal that is positive, you could see the global economy re-accelerate and growth again emerge as the leader.
A good broad market stock index fund will assure you have funds in the part of the markets that are leading and you will only have a portion of your funds that are lagging.
Markets Last Week
Equities finished south with the Russell 2000 down (2.45%), the Nasdaq Composite losing (2.19%). The S&P 500 retrenched (.98%), the Dow Jones held up well, only down slightly, losing (.43%).
Over the pond, the MSCI developed market EAFE Index was off (.62%) and the MSCI Emerging Market Index (1.86%).
Bonds gained last, pushing our 10 Year US Treasury to finish the week up .37%.
Question of the Week…
The amount one’s Social Security will increase annually is based on CPI-U based on the 12 month period ending September 30th of each year. Any increase will be reflected in your check the following January. COLA’s started based on Social Security Amendments in 1972 and began in 1975.
The question is, what has been the average annual cost of living increase for Social Security Benefits?
For information on the rules that will impact how you begin collecting your Social Security benefits, please see below!
Answer to last week’s question…!
Open enrollment for Medicare runs annually between October 15th and December 7th. During this period of time, Medicare beneficiaries can change certain coverages WITHOUT having to qualify medically, so the changes are GUARANTEED!
Which of the following Medicare Coverages CANNOT be changed without qualifying medically? Meaning they are NOT Guaranteed!
- Part D Prescription Drug Program
- Part C Medicare Advantage Program
- Changing from Original Medicare to Medicare Advantage
- Changing from Medicare Advantage to Original Medicare
- Changing Medicare Advantage plan to another Medicare Advantage plan.
The answer is: #4 – Changing from Medicare Advantage to Original Medicare.
When electing “Original Medicare”, Parts A & B, you typically purchase a Medicare Supplement (Medigap) plan to fill in what Parts A & B do not cover. Once you have enrolled in Medicare Part B you only have 6 months to purchase a Medicare Supplement without having to qualify medically. Beyond that period, you must provide medical evidence of insurability. The insurance company that offers the Supplement can outright deny you coverage or perhaps charge you a higher premium.